Hawkeye Forest Products Keeps Sharp Eye on Costs, Looks Forward to 2010: Wisconsin Hardwood Lumber Producer Hopeful for Rebound Next Spring
Hawkeye Forest Products: Wisconsin hardwood lumber producer is hopeful for rebound next spring; company specializes in black walnut.
Date Posted: 10/1/2009
TREMPEALEAU, Wisconsin – The past couple of years have been tough for the hardwood lumber industry, but John Hawkinson is hopeful about 2010.
Despite economic forecasts that say the recession will be over later this year (some economists say that, technically, the recession already has ended), “that doesn’t mean business will suddenly increase by 50 percent,” noted John, president of Hawkeye Forest Products.
“I don’t think we’re going to see anything great in our industry until next spring,” he said.
Hawkeye Forest Products has operations in Trempealeau, Wisconsin, which is located on the Minnesota border, about 20-plus miles north of La Crosse, and also has a corporate office in Boise, Idaho.
John, 64, was born and raised in Minnesota and earned bachelor’s and master’s degrees in education from the University of Northern Colorado after serving in the Army. He taught industrial arts at the middle school level in Boise. While teaching, John began buying lumber and reselling it to wood shop classes at other schools. He expanded to sell to cabinet shops, millwork companies and other forest products businesses. In 1979 he built a warehouse, quit teaching and began selling hardwood lumber full-time in 1979.
He added a concentration yard in Wisconsin in 1983, choosing that state “because we wanted to be in the North.” He wanted access to Northern hardwoods because of their good color qualities, he added.
He launched the concentration yard next to another lumber wholesaler with drying operations. “He was going to custom dry the lumber for us,” John explained. However, the other business gave preference to drying lumber for its customers first, so John decided to put in his own dry kilns the following year. “The original plan was to dry enough lumber to feed the distribution yard in Boise.”
As the business grew, John had excess lumber to sell and began selling to other lumber companies. The Wisconsin business outgrew his original company in Idaho, which he sold in 1990 except for maintaining a corporate office. He also owns an interest in another hardwood business, Kansas City Hardwood Corp. in Kansas City, Kan.
In 2002 he invested in the sawmill, building a new mill from the ground up on property adjacent to the yard and kilns.
Today, Hawkeye Forest Products employs about 45 people, including John and other family members at company headquarters in Idaho. In a good year the company cuts and ships 5-6 million board feet of kiln dried lumber. The mill cuts mainly black walnut (the leading species), cherry, red oak, white oak, hickory and hard maple; the company buys green ash, Canadian white paper birch, basswood, Tennessee aromatic red cedar and additional supplies of green hard maple, cherry, white oak and hickory. Depending on the species, the company cuts 4/4 through 10/4 and also produces quarter sawn and rift sawn lumber. The company’s low-grade material and cants are sold to pallet manufacturers in Minnesota and Iowa and to trailer manufacturers for decking. Hawkeye Forest Products also sells veneer logs, mainly black walnut.
The company buys a majority of its logs from contractors within 150-mile radius of the sawmill. It also buys some standing timber and contracts for timber harvesting and trucking.
The sawmill consists of two buildings, 60x150 and 50x120. A Mellott debarker removes the bark from the logs before they enter the mill. Primary breakdown is done with a Cleereman carriage and circle saw that are optimized with Inovec controls. A McDonough linebar resaw is behind the head rig and a Crosby edger and double-end trimmer. The company has the capability of doing 100 sorts off the 110-foot-long green chain.
Included in the sawmill operations is a Better Built Kilns steamer for walnut that heats the lumber in order to bleed the color of the heartwood into the sapwood and create a uniform color. The process normally takes 72 hours at 180-190 degrees.
The drying division has 65,000 square feet under roof for production, storing kiln dried lumber and loading and shipping operations. The five American Wood Dryer kilns with Lignomat computerized kiln controls have a combined capacity of 225,000 board feet. Equipment includes Gillingham Best stacker, Newman Whitney planer and double end trimmer, Mereen Johnson gang-rip and Mellott material handling equipment.
The company has a Rotochopper grinder to process scrap material. Some grindings are reserved for the company’s waste wood boiler system along with the shavings from the planer mill, while bark and mulch are sold to a landscape business.
Hawkeye Forest Products does not have a file room; the company relies on Menominee Saw and Supply for saw blades and saw blade service.
Kansas City Hardwood operates a concentration yard and dry kilns and specializes in red oak, white oak, black walnut and soft maple. It has five American Wood Dryer kilns and three Irvington Moore kilns with combined capacity of 350,000 board feet.
Hawkeye Forest Products is a member of the National Hardwood Lumber Assn., the U.S. Lumber Shippers Assn., the Lakes States Lumber Assn. and the Indiana Hardwood Lumber Assn.
John’s family is closely involved in the business. His wife, Kathy, is corporate secretary-treasurer and heads up the accounting department. A son, Marcus, works primarily in kiln dried lumber sales but also handles green and kiln dried lumber procurement and trucking. A daughter, Jennifer Geiger, tracks log purchases and inventory and does all documentation for export log and lumber sales; Jennifer’s husband, Tony Geiger, works in kiln dried lumber sales.
Other key employees include controller Bob Cook, dry division manager Jim Erickson, sawmill and resource manager Chad Rumpel, and sawmill supervisor Ken Dahl. Mark Rogers is the kiln and boiler operator and oversees drying, loading and unloading of the kilns.
Employee benefits include up to two weeks of paid vacation, seven paid holidays, health insurance and a 401(k) retirement savings plan.
John’s day-to-day role in the business is administrative – planning, production schedules, “paper work,” he said. He is still partly involved in sales.
Hawkeye Forest Products sells to distribution yards as well as cabinet manufacturers, millwork manufacturers and other end-users. The majority of the company’s domestic customers are located in the West, including Western Canada, although it also has customers in the Mid West and East.
About 75% of the company’s revenues come from sales to domestic markets. Sales to European markets and Japan account for about 10-15%, and sales of veneer logs, both domestic and export, another 10-15%.
“Our specialty has always been mixed loads of mainly upper grade lumber,” said John. “We also specialize in width-sorted and gang-ripped flooring blanks.”
The company’s export markets were developed mainly through advertising in publications read by hardwood lumber buyers.
Most inbound and outbound trucking is done by contract haulers. West-bound domestic shipments and shipments to Asia and Europe are done via container.
“Added value, color sorting along with consistent quality are the things for success in our industry,” said John. Employees and customer relationships are very important, too, he added.
One of the chief concerns John notes in the industry is increasing costs while profit margins remain flat. “Each year,” he said, “health insurance, utilities, taxes, wages and equipment costs go up, but margins struggle and remain the same.” A company must scrutinize all the areas of the business in order to control costs, and capital expenditures must be wound. “We have to be innovative and efficient,” he said.
“Fortunately, we have a very dedicated workforce,” said John. For example, Greg Heinz, Hawkeye’s very first employee, still works for the company and is in charge of shipping and receiving. “We also have a very loyal customer base,” added John. Both are of utmost importance for any business to succeed.”
This year, sales are down about 20%, John reported. “We’ve been holding our own,” he said. “We’re just running lean and mean, cutting costs here and there.”
Although he has tightened the company’s belt, John has been able to avoid making layoffs or diminishing benefits to employees, such as the group health insurance and matching 401(k) retirement plan.
Asked how he has been able to accomplish that, he said, “We’re just damn lucky.”
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